Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. (35 points) DigiPro is a computer manufacturing company active in Europe and Australia. Recently, DigiPro has decided to enter the healthcare market and produce

image text in transcribed

2. (35 points) DigiPro is a computer manufacturing company active in Europe and Australia. Recently, DigiPro has decided to enter the healthcare market and produce dental examination kits. According to their estimations, the current market demand for this product is 50,000, and it will grow annually at 10%. DigiPro needs to determine the capacity of this new plant considering different cost and revenue components. The total cost of developing a manufacturing plant to produce these kits is $1,200,000. Each kit can be sold for $4. The unit production cost of each item is $0.6 Depending on the capacity, machine maintenance cost is $0.5 per capacity unit. Considering all these components, calculate the cash flow for the next 10 years. First, find the optimal capacity considering a 10% discount rate. Then find a discount rate that makes this project break-even. 2. (35 points) DigiPro is a computer manufacturing company active in Europe and Australia. Recently, DigiPro has decided to enter the healthcare market and produce dental examination kits. According to their estimations, the current market demand for this product is 50,000, and it will grow annually at 10%. DigiPro needs to determine the capacity of this new plant considering different cost and revenue components. The total cost of developing a manufacturing plant to produce these kits is $1,200,000. Each kit can be sold for $4. The unit production cost of each item is $0.6 Depending on the capacity, machine maintenance cost is $0.5 per capacity unit. Considering all these components, calculate the cash flow for the next 10 years. First, find the optimal capacity considering a 10% discount rate. Then find a discount rate that makes this project break-even

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Futures And Options Markets

Authors: John C. Hull

5th Edition

0131445650, 9780131445659

More Books

Students also viewed these Finance questions